Chargeback: your credit card's built-in protection

Dillon says it is “very important to check statements to make sure the value of the purchase is correct and look out for anything you don’t recognise”. She cites the example of a someone buying an item for €20 and a shop assistant inadvertently keying in €200 or indeed the opposite – an item costing €200 but charged at a rate of €20. “A shop might make a mistake like this and then try and rectify it by charging €180 to a person’s credit card retrospectively but they cannot do this as the second payment has not been properly authorised.”

If an error like this is made, the retailer has little choice but to suck it up.

Chargebacks also apply if a supplier doesn’t deliver the goods or services you paid for – and that supplier can be based anywhere in the world. You can also apply to your bank for your money back.

If you buy goods and they are delivered but are either faulty or not as described you can get a refund through the bank, once you have returned the dodgy product. Sometimes returning an item is impossible. If you buy a blue sofa but the retailer delivers a red one and then refuses to take it back and insists that you take it, you might think you have no choice. You do. You cannot be expected to return the sofa – given its bulk – and it is the retailer’s full responsibility to come and get it. If they don’t, you apply for a chargeback. Scenarios like this frequently see people ending up with their money back and a couch, albeit one that doesn’t match the curtains.

There are other ways chargebacks can come to your aid. As with gyms, hotels are also going under as a result of the recession and many consumers have found themselves painfully out of pocket. Unless, that is, they use their cards to buy. If a merchant has ceased trading – as is the case with HMV – and owes you something, you can get your cash back. Even if the company has no money, you still get the refund and it is the merchant’s bank – not the merchant – that takes the hit.

Even if you have got some of the service you can claim anything outstanding. In 2011, the Dublin gym chain Total Fitness went into liquidation, owing more than 10,000 members around €1.6 million. The liquidator wrote to them saying that as unsecured creditors they could whistle for their money. But members who paid using credit cards were able to reclaim the unused portion of their membership thanks to the chargeback mechanism. If someone paid €800 for a full year’s membership but only three months had expired when it closed, the were able to charge back the balance of 75 per cent, or €600.